PETALING JAYA: Main Market-bound Big Caring Group Bhd is poised for earnings growth, supported by organic outlet expansion, acquisitions, stronger sales and lower borrowing costs following its planned debt repayment using proceeds from its initial public offering (IPO).
TA Research expects Big Caring’s core earnings to grow 60.2% in the financial year ending June 30, 2027 (FY27) to RM293.1mil, followed by growth of 8.6% to RM318.3mil in FY28 and 8.5% to RM345.4mil in FY29.
“We project core earnings growth in FY27 to be driven by interest savings from the repayment of borrowings using IPO proceeds, alongside a lower effective tax rate.”
Malacca Securities Research, meanwhile, expects Big Caring’s core earnings to grow at a compound annual growth rate of 29.3% over FY27 to FY29, reaching RM281.3mil, RM350mil and RM413.8mil, respectively.
For FY26, Big Caring reported earnings of RM191.6mil on revenue of RM4.02bil.
Analysts expect growth to be supported by 40 to 50 new outlets annually, same-store sales growth of 7% to 9% and higher sales of better-margin own-brand products.
They said growth would also be supported by the recently completed iCare Pharmacy acquisition and the proposed acquisition of Singapore-based Yeap Medical Supplies Pte Ltd, which would give the group access to Singapore’s healthcare supplies market.
Malacca Securities noted that Big Caring’s retail network had grown from 179 outlets in July 2022 to 668 as at end-September 2026, through 235 new outlets and 290 acquired outlets, offset by 36 closures.
It said the group had a track record of bringing new outlets to profitability, with 87% of new outlets opened between FY23 and FY26 achieving earnings before interest, tax, depreciation and amortisation (Ebitda) breakeven.
“The 12 outlets opened and 10 iCare outlets acquired since July 2026, together with 190 of 219 recent openings having already reached Ebitda breakeven, provide visibility on the rollout,” it said.
Big Caring was co-founded by husband-and-wife pharmacists Lee Meng Chuan and Lim Sin Yin, who opened their first retail outlet in Damansara Uptown in 2006.
Lee is the group’s managing director cum chief executive officer, while Lim is an executive director. The business had grown to 12 outlets in the Klang Valley by 2017.
Then, in 2018, its merger with RedCap Pharmacy, which was owned by private equity firm Creador, expanded its presence into Johor and brought Creador in as a major shareholder.
The group subsequently embarked on an acquisition-led expansion, broadening its geographical reach and diversifying into other healthcare businesses.
Among its major acquisitions were Caring Pharmacy from 7-Eleven Malaysia Holdings Bhd
for RM888.3mil, pharmaceutical distributor Medispec for RM249.4mil, a 57.1% stake in physiotherapy chain Your Physio for RM32.8mil, and the iCare Pharmacy business and assets for about RM32.5mil.
However, the acquisition-led expansion has also driven up the group’s borrowings, which stood at RM1.7bil as at Aug 31, 2026, with its gearing ratio at 2.8 times.
Big Caring aims to strengthen its balance sheet through its IPO, offering 1.88 billion shares, representing 25.5% of its enlarged share capital.
The IPO comprises a public issue of 8% of its enlarged share capital, which is expected to raise RM637.79mil, and an offer for sale of 17.5%, through which the selling shareholders will receive RM1.4bil.
Uptown Paradise Sdn Bhd (UPSB), which is 54%-owned by co-founders Lee and Lim, and Creador-linked Iris Pallida Sdn Bhd (IPSB) account for most of the shares offered for sale.
UPSB and IPSB are selling shares equivalent to 5.1% and 11.7% of enlarged share capital, respectively.
Following the IPO, UPSB’s stake in Big Caring will fall to 34.4% of enlarged share capital, while IPSB’s shareholding will decline to 19.3%.
The latter’s stake could fall further to 16.3% if the over-allotment option is fully exercised. Sources familiar with the matter said a “substantial” portion of UPSB’s proceeds from the offer for sale would be used to pare down personal borrowings taken by its shareholders to fund the acquisition of Caring Pharmacy.
Meanwhile, of the RM637.79mil raised through the public issue, RM570.73mil or 89.5% will be used to repay bank borrowings.
This is expected to reduce the group’s gearing ratio to 0.9 times and generate annual interest savings of RM26.3mil.
Looking ahead, the group plans to open about 40 to 50 new pharmacy outlets annually.
Based on the planned expansion, its existing distribution centre is expected to operate close to full capacity within the next five years.
Another RM30mil or 4.7% from the IPO proceeds will be used to establish a new distribution centre, while the remaining RM37.06mil will go towards listing expenses. Priced at RM1.08 per share, the IPO values the group at about 41.5 times its FY26 earnings.
The retail offering closes at 5pm today, while the institutional offering closes tomorrow.
The group is scheduled to make its Bursa Malaysia debut on Nov 19, with an expected market capitalisation of RM8bil.
Malacca Securities assigned a fair value of RM1.40 per share, representing a potential upside of 29.6% from the IPO price.
Its valuation was based on 32.7 times its mid-FY28 earnings, in line with the peer average forward price-to-earnings.
TA Research, meanwhile, derived a fair value of RM1.12 per share based on 27 times its 2027 earnings forecast.
